This On-Chain Metric Suggests Bitcoin Not In Danger Of Another Sharp Drawdown

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Historical data from an on-chain indicator may indicate that Bitcoin may not be in danger of another sharp crash at this point.

Bitcoin Spot Exchange Deposit Addresses Remain at Very Low Values

As noted by an analyst in a CryptoQuant afterthere are signs that another crash similar to Q3 2018 is unlikely to happen at the moment.

The relevant indicator here is the “spot exchange deposit addresses”, which is a measure of the total number of Bitcoin wallet addresses currently sending transactions to centralized spot exchanges.

Generally, investors deposit their coins on spot exchanges for selling purposes. Thus, a spike in this metric could be bearish for the crypto’s price, as it could hint at the dumping behavior of a large number of addresses.

On the other hand, low values ​​imply that not many holders are increasing the selling pressure in the market at the moment.

Here is a chart showing the trend in Bitcoin spot exchange deposit addresses in recent years:

Bitcoin Spot Exchange Deposit Addresses

Looks like the value of the metric has been going down in recent months | Source: CryptoQuant

As you can see in the chart above, the quant has marked the relevant trend zones for the Bitcoin spot exchange’s deposit addresses.

It seems that usually around periods when this indicator has risen sharply to local highs, the price of BTC also observed a high and then fell.

Since last year’s bull run top, the spot exchange’s deposit addresses have generally been winding down, with only a few spikes in the period.

Some investors recently wondered if there will be another sharp drop for Bitcoin in the near future, just like that one bear market 2018 saw after months of sideways movement similar to now.

Looking at the chart for the trend during the 2017/2018 cycle, it is clear that the stat fell after the bull run top and then stayed low as the bear market continued.

However, in the third quarter of 2018, the indicator suddenly jumped. A few months after this happened, the price observed a crash.

Since there hasn’t been such a strong rise in the indicator in recent weeks, the analyst believes there is no indication that a similar decline would take place now.

BTC price

At the moment of writing, The price of Bitcoin hovers around $18.8k, down 4% over the past week.

Bitcoin price chart

The value of the crypto seems to have dipped below the $19k level again | Source: BTCUSD on TradingView
Featured image from André François McKenzie on Unsplash.com, charts from TradingView.com, CryptoQuant.com

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